Financial services rarely stands still and some areas have seen a complete transformation of roles and the skills that are required. One area in particular that has seen a cataclysmic shift in expectation is that of anti money laundering (AML) compliance, writes Phil Rolfe

Cast your mind back to pre financial crisis, before the barrage of regulation began. The AML compliance and advisory department was a sleepy backwater, where bright introverts went to quietly work their way up the pay scales and into small offices with doors, which were rarely left open.

It was an ivory (often shiny glass) tower role in head office, which was seen as ‘business prevention versus value add.’

Then in 2010, the fines started to really ramp up. The proliferation of AML regulation – and the subsequent breaches by financial institutions – resulted in some really breath taking fines.

Remember when HSBC was fined $1.2 billion by US authorities for its Mexican operations? A US Senate investigation said the UK headquartered bank had become a conduit for “drug king pins and rogue nations.” Ouch. No wonder banking executives were left quaking in their boots.

And the upshot of this step change was to turn the spotlight on the hidden corridors of HQ where compliance lived.  As banking executives hunted for solutions, those who had sought sleepy backwater roles were thrust into the glare of the regulatory spotlight.

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From: You work where ?…

Attracted by the structured, regulatory driven environment which edged forwards through cycles of consultation and approval, traditional compliance professionals liked the intellectual challenge of regulatory interpretation, the slow pace of change and the relative isolation of the roles.

The only excitement occurred when someone slipped a piece of paper under the door seeking approval for a new product (which was already live) or a deal (which was already done). This resulted in much wringing of hands and after lots of reviews approval was eventually coaxed out of the individual, their boss and their boss’s boss.

To: Oh! You work there …

Now AML compliance and advisory is front and centre – these teams are struggling to recruit and most financial institutions are understaffed and under pressure. Those who had aimed for a career culminating in their own small office in HQ, are finding themselves in unchartered territory and many do not like that territory very much.

Not only does the phone never stop ringing, but the emails keep coming and people are actually kicking the closed doors down and asking them to attend committees, boards and external regulatory meetings. In addition to a barrage of calls and mails they are being asked to opine on issues at pace and under pressure. They are visible and they are being held accountable.

What’s that coming over the hill ….

The barrage of AML regulation has been enormous, from the Serious Crime Act in 2015 (the updated Proceeds of Crime Act) to the Money Laundering Terrorist Financing and Transfer of Funds Regulations in 2017.

AML compliance professionals haven’t stopped. And it is not going to get any better. We also now have a new overarching financial crime regulator, the Office for Professional Body Anti Money Laundering Supervision, so expect to see more AML regulation coming your way.

The major problem for financial institutions is that few have recognised the paradigm shift in how compliance has changed. The increase in visibility and pressure of sitting in the hot seats has not been matched by commensurate increases in rewards and so vacant roles are not being filled.

This is a vicious circle – long term unfilled vacancies lead to increased pressure on permanent employees, increased pressure over sustained periods leads to burn out, burn out puts fear into people who may have gone for the promotion or moved into compliance roles. And this all leads to undersupply, which is exacerbated by remuneration not keeping pace with the profile and challenges of the role.

Where next …

Companies need to recognise that AML compliance and advisory roles are now critical to the success of their organisations and so they have to attract a different type of person and leader.

Gone are the intellectual introverts who have never strayed out of head office and in are the extroverts who have more experience of working around the world in front office, technology, risk, operations and change.

There are a few role model senior leaders out there, but they are few and far between. Those leading the charge are struggling to find talent in their existing pools of traditional compliance professionals (who are still hiding behind closed doors) and are being forced to recruit those with the right business skills and adding compliance expertise once on board.

If you want a challenging role that makes a difference to our industry and society then seek out a new era leader, grab your tin hat and join the party. I guarantee one thing – it will be one heck of a ride.

Phil Rolfe is Financial Services Director at P2 Consulting